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||Neutral Citation Number:  EWCA Civ 152
||Case No: A2/2012/0776
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr. Justice Tugendhat
 EWHC 3659 (QB)
||Royal Courts of Justice
Strand, London, WC2A 2LL
||5 March 2013
B e f o r e :
LORD JUSTICE MAURICE KAY
Vice-President of the Court of Appeal, Civil Division)
LORD JUSTICE MOORE-BICK
LORD JUSTICE RIMER
|| (1) TESLA MOTORS LIMITED
(2) TESLA MOTORS INC.
||- and -
||BRITISH BROADCASTING CORPORATION
Mr. Richard Spearman Q.C. and Mr. William McCormick Q.C. (instructed by Carter-Ruck) for the appellants
Mr. Andrew Caldecott Q.C. and Ms Catrin Evans (instructed by BBC Litigation Department) for the respondent
Hearing dates : 15th and 16th January 2013
HTML VERSION OF JUDGMENT
Crown Copyright ©
Lord Justice Moore-Bick :
- The appellants, Tesla Motors Ltd and Tesla Motors Inc. (together "Tesla"), manufacture and distribute electric motor cars which are sold in a number of different countries. The first vehicle they produced was known as the 'Roadster', a sports car based on the Lotus 'Elise'.
- During 2008 Tesla made two Roadsters available for review by the well-known programme 'Top Gear' broadcast by the respondent, British Broadcasting Corporation ("BBC"). Over the course of two days the two cars were put through their paces on the 'Top Gear' test track. The tests were designed to push the cars to the limits of their performance in terms of acceleration, straight line speed, cornering and handling. One of the cars was driven by the presenter of the show, Jeremy Clarkson, who was filmed driving it round the test track and commenting on his experience. The film, which lasted about ten minutes, was included in the edition of 'Top Gear' broadcast on 14th December 2008. It has since been shown by the BBC and other television channels on several occasions and remains available for viewing on the 'Top Gear' web site.
- Many of Mr. Clarkson's comments, particularly in relation to the car's speed, acceleration and the cost of re-charging, were favourable, but some were not. In particular, he made certain comments about the Roadster's range and reliability that have given rise to the present proceedings.
- There are two passages in the film to which Tesla takes exception. The first begins with Mr. Clarkson praising the car and saying:
"This car, then, really was shaping up to be something wonderful. But then . . . "
At this point there is the artificial sound of a motor slowing down and stopping, followed by a shot of Mr. Clarkson sitting in what has become a stationary vehicle saying:
"Oh! . . . Although Tesla say it will do 200 miles, we worked out that on our track it would run out after just 55 miles and if it does run out, it is not a quick job to charge it up again."
There follows a shot of people pushing one of the Roadsters into the hangar and Mr. Clarkson plugging in the cable in order to re-charge it.
- The second passage to which Tesla objects shows Mr. Clarkson driving one of the Roadsters and saying:
"I don't believe this . . . the motor has overheated and I have reduced power."
That is followed by a shot of a Roadster stationary on the track and then Mr. Clarkson continues:
"While it cooled down we went to get the silver car out again (followed by a shot of the car in the hangar with the bonnet up) only to find that while it was being charged its brakes had broken. So then, with the light fading, we had no cars at all.
I did think that the Teslas would bring a bit of peace and quiet to our track with their electric motors. Didn't think it would be this much peace and quiet though. That is the sound of silence.
What we have here, then, is an astonishing technical achievement. The first electric car that you might actually want to buy. It's just a shame that in the real world it doesn't seem to work
I tried to be fair. I did try, but it was – it didn't work"
- On 29th March 2011, over two years later, Tesla issued proceedings against the BBC claiming damages for libel and malicious falsehood based on publications of the film during the preceding twelve months. In paragraph 5 of its particulars of claim served together with the claim form it alleged that the words
"although Tesla say it will do 200 miles, we worked out that on our track it would run out after just 55 miles"
were defamatory because they meant that Tesla had intentionally or recklessly grossly misled potential purchasers of the Roadster by claiming that it had a range of about 200 miles when in fact its true range was in the order of 55 miles.
- In paragraph 7 of its particulars of claim Tesla also alleged that the film was false in the following respects:
"(1) The first Roadster shown (which was silver in colour) did not run out of charge;
(2) The first Roadster did not have to be pushed back into the hangar as a result of running out of charge;
(3) At no point were the brakes of the first Roadster broken;
(4) The second Roadster (which was grey in colour ) did not become immobile as a result of overheating.
(5) There was no time at which neither Roadster was available for driving."
- No specific allegation was made, however, that false statements had been made about the Roadster's range. Tesla alleged that each of the false statements mentioned above had been published by the BBC maliciously and was calculated to cause it pecuniary damage in respect of its business.
- Tesla claimed damages for libel, for malicious falsehood (relying on section 3 of the Defamation Act 1952) and for an injunction to prevent further publication of the statements in question.
- The BBC served its defence on 21st June and on 30th June 2011 it applied for an order striking out both claims under CPR 3.4(2) or under the inherent jurisdiction of the court on the grounds that the particulars of claim disclosed no reasonable grounds for bringing them or were an abuse of the process. In the alternative it sought summary judgment under CPR 24.2. It also sought to have the claim for libel dismissed on the grounds that the words complained of were not capable of bearing the meaning alleged in the particulars of claim.
The judgments below
- The matter came before Tugendhat J. on 19th October 2011. In a succinct and lucid extempore judgment he held that the words complained of in paragraph 5 of the particulars of claim were wholly incapable of conveying the meaning that Tesla had intentionally or recklessly misled the public about the Roadster's range under ordinary driving conditions, to which alone its publicity related. He reached that conclusion because he considered that the contrast between the conditions under which the cars had been tested by 'Top Gear' and those which one would expect to encounter on public roads were so great that no reasonable person could understand that performance on the track was capable of direct comparison with performance on public roads. He therefore struck out the claim for libel.
- On 28th October 2011 the judge handed down his decision on the remaining limb of the BBC's application. He held that if Tesla wished to rely on section 3(1)(a) of the Defamation Act it was not sufficient in this case for it simply to allege that the broadcasts were calculated to cause it pecuniary damage; it had to give particulars of the nature of the damage which it alleged the false statements would probably cause and the grounds for saying that they were more likely than not to cause such damage. Although he expressed doubts about Tesla's ability to formulate a satisfactory plea in this case, he was willing to allow it an opportunity to do so. He therefore ordered that the claim for malicious falsehood be struck out unless within a limited period Tesla applied for and obtained permission to amend.
- The matter came back before the judge on 10th February 2012 on an application by Tesla to amend its particulars of claim in three significant respects:
(i) to allege that the words relating to the car's range previously complained of meant that
"there were reasonable grounds to suspect that [Tesla] had intentionally and significantly misrepresented the range of the Roadster by claiming that it had a range of about 200 miles in that its range on the "Top Gear" track was only 55 miles;"
(ii) to provide particulars (running to 12 pages) of the claim under section 3 of the Defamation Act; and
(iii) to add a claim for special damages in the sum of US$3.9 million.
- The judge pointed out that two features of the case gave rise to issues of causation (paragraph ). The first was the fact that most of those who had viewed the programme had done so before 30th March 2010 and therefore outside the limitation period; the second was that Tesla admitted that the range of the Roadster on the test track was about 55 miles and that if it ran out of charge it took several hours to charge it up again. Moreover, as he later pointed out, in relation to the claim for malicious falsehood, the question of causation was further complicated by the inclusion in the programme of a number of statements favourable to the Roadster as well as statements that were unfavourable but accepted to be true.
- The judge dealt first with the proposed amendment of the claim for malicious falsehood. For the purposes of the application he assumed in favour of Tesla that at least some reasonable viewers would understand the programme to contain the false statement that one of the Roadsters had actually run out of charge and that it had had to be pushed into the hangar because it had no power remaining (paragraph ). He also assumed that some reasonable viewers would understand the film to be saying that the brakes themselves had failed, whereas what had actually failed was a fuse in the equipment providing power-assistance to the brake pedal (paragraph ). Finally, although malice was in issue, the judge assumed that if Tesla proved any relevant falsehood, it would also succeed in proving malice (paragraph ). He observed, however, that in relation to each statement which Tesla alleged to be false there was a true statement relating to the same matter which was unfavourable to the Roadster (paragraph ).
- The judge considered the proposed particulars of the claim under section 3 of the Defamation Act, part of which Tesla also relied on in support of its claim for special damages. It will be necessary to consider those particulars in greater detail at a later stage, but it is sufficient for present purposes to say that the judge regarded them as vague and insufficient to enable the BBC to distinguish between damage said to have been caused by the false statements made during the limitation period and damage flowing from false statements that were time-barred and from statements that were damaging but admitted to be true. In the end he came to the conclusion that the proposed amendment had no real prospect of success and could not be said to have been made in respect of a real and substantial tort (paragraphs [82-83]). He therefore refused permission to make the amendments. As to the claim in libel, the judge held that the words of which Tesla complained were incapable of bearing the meaning which Tesla sought to attach to them for the same reasons as had led him to strike out the original claim (paragraph ). He therefore refused permission for any of the proposed amendments.
- On 3rd May 2012 Sir Richard Buxton "with some hesitation" gave Tesla permission to appeal against the judge's order striking out the claim in libel, but refused permission in respect of other grounds. On 26th July 2012 Sir Robin Jacob granted permission in relation to the other grounds of appeal.
(a) The original allegation
- It is convenient to consider first the claim in libel. Tesla says, first, that the judge was wrong to hold that the words, sounds and images which made up the programme were incapable of bearing the meaning pleaded in the original particulars of claim or any of the lesser meanings identified at the hearing of the application to strike out the claim. The meaning alleged in the particulars of claim is that Tesla had intentionally grossly misled potential customers about the Roadster's range. The lesser meanings were (a) that Tesla had grossly misled potential customers recklessly (rather than intentionally), (b) that it had grossly misled potential customers (i.e. without being reckless) and (c) that it had simply misled potential customers (i.e. not grossly and neither intentionally nor recklessly). However, in each case the basis of the allegation was the same, namely, that Tesla had claimed that the car had a range of 200 miles whereas its true range was in the order of 55 miles.
- It was common ground that the judge applied the correct principles for the purposes of determining what meanings relating to the Roadster's range the programme was capable of bearing. They were derived from Skuse v Granada TV  EMLR 278 and Jeynes v News Magazines Ltd  EWCA Civ 130 (unreported) and are summarised as follows in paragraph  of his judgment:
"(1) The court should give to the material complained of the natural and ordinary meaning which it would have conveyed to the ordinary reasonable reader reading the article or viewing the programme once.
(2) The hypothetical reasonable reader (viewer) is not naïve but he is not unduly suspicious. He can read between the lines. He can read in an implication more readily than a lawyer and may indulge in a certain amount of loose thinking. But he must be treated as being a man who is not avid for scandal and someone who does not, and should not, select one bad meaning where other non-defamatory meanings are available. (Emphasis added.)
(3) While limiting its attention to what the defendant has actually said or written the court should be cautious of an over-elaborate analysis of the material in issue.
(4) The reasonable reader does not give a newspaper item the analytical attention of a lawyer to the meaning of a document, an auditor to the interpretation of accounts, or an academic to the content of a learned article.
(5) In deciding what impression the material complained of would have been likely to have on the hypothetical reasonable reader the court is entitled (if not bound) to have regard to the impression it made on them.
(6) The court should not be too literal in its approach.
The above list was broadly followed by the Court of Appeal in Jeynes v News Magazines Ltd  EWCA Civ 130 at , save that it added the important point that the hypothetical reader is taken to be representative of those who would read the publication in question."
- Mr. Spearman Q.C. submitted on behalf of Tesla that the opening words of the passage complained of ("This car really was shaping up to be something wonderful") were intended to point up the contrast with what follows ("but then . . ."), namely, the noise of a motor running down and the disparaging comments about the car's range. Moreover, the words themselves ("although Tesla say . . . we have worked out") clearly invite a comparison between the claims made for the Roadster by Tesla and the car's performance as ascertained on the track. He submitted that the comparison is directed to the characteristics of the car in the eyes of a potential purchaser and that the clear implication is that it is not in fact "something wonderful" because its range is only about 55 miles. The discrepancy between the claim made by Tesla and the car's performance on test was so great that the reasonable viewer would naturally conclude that Tesla must have set out to mislead the public.
- For the purposes of the appeal I have watched the whole of the film a number of times. In my view it was important to do so because, although the transcript with which the court was provided is a helpful reminder of what was said and shown, it does not convey the same impression as the film itself. One important matter which is vividly conveyed by the film is the nature of the testing that was carried out by the 'Top Gear' team, which involved violent acceleration (described as a "drag race"), continuous high-speed driving at or near the limits of the car's capability and heavy cornering. Testing of this kind is typical of 'Top Gear', as most viewers of the programme would know, but even a person viewing the programme for the first time would immediately realise that the style of driving bears no relationship to that which could be engaged in on a public road, even if the car were to be driven quickly by normal standards. It was for this reason that Mr. Caldecott Q.C. submitted that no reasonable person could draw the inference that the car's range under normal, albeit quick, driving conditions was only 55 miles or that in claiming that it had a range of 200 miles Tesla had dishonestly set out to mislead the public.
- At the heart of this part of the case is the allegation that the statement contained in the film meant that the true range of the Roadster was in the order of 55 miles. That is important, because it is the extent of the discrepancy between the claimed range of 200 miles and the alleged true range of about 55 miles that supports what is said to be the implied assertion of dishonesty. Indeed, so great is the discrepancy that, if it were true, it is difficult to see what other inference could reasonably be drawn. However, it is clear from what the viewer sees of the tests carried out on the car that they bear no relationship to driving on public roads, or at any rate to the kind of driving on public roads of a kind on which a manufacturer could possibly base an estimate of range. It would be obvious to a reasonable viewer, therefore, that the range derived from track testing was not in any meaningful sense the car's "true range" and he would therefore have no reason to infer that by claiming a range of 200 miles Tesla had set out to mislead.
- It follows in my view that the passage complained of is incapable of bearing the primary meaning for which Tesla contends. Nor do I think that it is capable of bearing any of the other meanings suggested in the course of the first hearing before the judge. The problem is that whatever the precise nature of the statement complained of, it depends on the reasonable viewer's accepting that the range "on our track" provides a reliable indication of the true range under normal driving conditions. However, for the reasons I have given, I do not think it could reasonably be understood in that way. Moreover, the discrepancy between the range claimed by Tesla (200 miles) and what is alleged to amount to a statement about the true range is so great that, if accepted as correct, it could not be explained otherwise than in terms of intentional or reckless misrepresentation on Tesla's part. In reality the allegation is dishonesty or nothing and for the reasons I have given I do not think that the programme is capable of being understood by a reasonable viewer as containing a statement that Tesla was dishonest in claiming a range of 200 miles under normal driving conditions.
- In those circumstances it is unnecessary to consider whether the judge ought to have exercised the power to strike out the claim as an abuse of process in accordance with the principles set out in Jameel v Dow Jones & Co. Inc  EWCA Civ 75,  QB 946.
(b) The proposed amendment
- The question then arises whether the judge was wrong to refuse Tesla permission to amend the particulars of claim to allege that there were reasonable grounds to suspect that Tesla had "intentionally and significantly" misrepresented the range of the Roadster. Once again, he held that the words complained of were incapable of bearing the meaning alleged. In my view the natural meaning of those words is that there were reasonable grounds to suspect that Tesla had been dishonest in putting forward the claim that the car had a range of 200 miles under ordinary driving conditions. However, before the judge Mr. Spearman disavowed any intention to allege dishonesty, saying that the word "intentionally" was intended to convey no more than that Tesla had intentionally made a representation which was in fact incorrect, not that it had intentionally misrepresented the facts. That remained the position throughout the argument on the appeal until at the close of his reply Mr. Spearman was invited to clarify Tesla's position. At that point he recognised that the proposed pleading did amount to an allegation that there were grounds to suspect Tesla of dishonesty, but nonetheless said that Tesla now wished to stand by it. As a result, the amendment was in effect no longer the one that the judge had been asked to consider.
- The meaning set out in the proposed amendment, like its predecessors, depends on a comparison between Tesla's assertion that the Roadster had a range of 200 miles under ordinary driving conditions and the statement that its range under test on the 'Top Gear' track had been calculated at about 55 miles. Only if he thought that there was a meaningful comparison between testing on the 'Top Gear' track and ordinary driving on public roads could the reasonable viewer think that it was being suggested that there were grounds for thinking that Tesla had set out to mislead. However, because of the obviously extreme nature of the driving on the track, which bore little or no relation to driving on public roads, I do not think that he could do so. For that reason the case pleaded in the proposed amendment was bound to fail, whether it be understood to involve an allegation of dishonesty or not. The fact is that the difference between the two was obviously so great that a reasonable viewer would realise that the comparison was meaningless. In my view, therefore, the judge was right to hold that the words complained of were incapable of bearing the meaning which Tesla sought to attribute to them.
(a) The claim for general damages - pleading
- It was common ground that a claimant can recover general damages under section 3 of the Defamation Act if he can prove that the statement of which he complains is calculated – i.e. more likely than not – to cause him pecuniary damage. There is no appeal against the judge's decision that in this case, because of the problems of causation to which he referred, Tesla should be required to set out the nature of its case in some detail. That was necessary to enable the BBC to understand the grounds on which Tesla alleged that the statements on which it relied were more likely than not to cause it damage. The question for decision, therefore, is whether in the exercise of his discretion the judge ought to have given Tesla permission to amend so as to provide the proposed particulars of its case.
- I accept that in general the court should lean in favour of allowing amendments in order to ensure that the real dispute between the parties can be determined, but that principle is subject to certain limits. It has become increasingly a matter of concern that substantial amendments, particularly if made at a time when preparation for trial is advanced, can have a very disruptive effect on the proceedings and add significantly to the costs. Moreover, at whatever stage it is made a substantial amendment (other than one which abandons part of the case) is liable to increase the demands on the resources both of the court and the parties by prolonging the trial. Mr. Spearman accepted that when considering whether to allow an amendment the court has to take into consideration a variety of factors. Among them are the stage at which the application is made, the extent to which other parties to the proceedings are likely to be prejudiced, whether any prejudice can be adequately compensated in costs and the additional burden likely to be imposed on the parties and the court in dealing with the new case. It must also have regard to the intrinsic merits of the case which the applicant seeks to raise, because it would clearly be contrary to the overriding objective to give permission to pursue a case which has no real prospect of success at trial. This latter factor is of some importance in the present case.
- The particulars of its claim under section 3 which Tesla seeks to introduce by amendment fall into two parts. Paragraphs 9(1) - (4) of the draft set out the nature of the damage which it is said each of the broadcasts was likely to cause and the reasons why Tesla was more likely than not to suffer damage of that kind. Paragraph 9(5), on the other hand, contains lengthy particulars of what are alleged to have been the actual effects of the broadcasts. Strictly speaking, they are not particulars of the probable consequences of the broadcasts, but Mr. Spearman argued that what actually happened provided some evidence of what was always likely to happen.
- Mr. Spearman submitted that the case as pleaded in the proposed amendment properly set out a claim which had a real prospect of success and that the judge should therefore have given Tesla permission to amend. Two different aspects call for consideration: whether the proposed amendment set out the case with sufficient particularity; and whether the pleaded case had a real prospect of success at trial. It is then necessary to consider what would be the effect on the proceedings of allowing an amendment of this kind at this stage.
- At the heart of the judge's concerns lay the question of causation. Following the original broadcast on 14th October 2008 there were 27 repeat showings of the programme before the earliest actionable broadcast, so there was every reason to think that, if the programme was capable of causing Tesla damage at all, some, possibly most, of that damage must already have been caused by the time the statements complained of were published. It was also possible that earlier, time-barred, broadcasts might be responsible for some damage incurred after the date of the broadcasts that were the subject of the action. Added to that is the potential for damage to have been caused by any unfavourable statements about the Roadster that were admitted to be true (for example, the time required to re-charge the batteries and the consequences of overheating). Although for the purposes of a claim under section 3 it was not necessary for Tesla to identify how much damage had been caused by the actionable falsehoods, it was for those reasons necessary in this case for it to describe in general terms the nature and extent of the loss said to be likely to result from the publications which were the subject of the action.
- The judge found that:
"32. . . . in relation to each statement which the Claimants allege to be false, and to be calculated to cause (and, now, to have actually caused) pecuniary damage, there is a true statement which relates to the same matter, and which is unfavourable to the Roadster."
- He later identified the unfavourable statements as follows:
"59. . . . It is admitted to be true "that on our track it will run out after just 55 miles and if it does run out it is not a quick job to charge it up again" (see para 7 above). It is admitted to be true that there was a lack of reliability in the fuse on the electric circuit providing additional power to the brakes."
- Mr. Spearman criticised the judge on the grounds that in the absence of the single meaning rule (which the judge accepted does not apply in relation to malicious falsehood) his approach was fatally flawed because it did not make any allowance for viewers who did not take from the programme the particular meanings to which he referred, but some other unfavourable meanings instead. He also submitted that the judge had been wrong to say that in relation to each false statement there was a true statement relating to the same matter which was unfavourable to the Roadster.
- In my view the second of those criticisms is largely well-founded. Viewed fairly as a whole, that part of the film which contained the statement that the Roadster had run out of charge (falsehoods (1) and (2)) also contained the statement that "on our track it will run out after just 55 miles and if it does run out it is not a quick job to charge it up again". I accept that, because of the different styles of driving involved, that could not reasonably be taken as meaning that under normal driving conditions the car could be expected to run out in anything like that distance, but it does emphasise the consequences of running out, in particular the time taken to re-charge the battery. Given the widespread concern about the range of electric vehicles generally, those unfavourable statements would be likely to damage the Roadster's prospects. On the other hand, Mr. Spearman's submission that the statement that the brakes had "broken" (falsehood (3)) was incapable of conveying the meaning that there was a lack of reliability in the fuse on the electric circuit providing additional power to the brakes is in my view correct. There was nothing in the film to suggest that that was the true nature of the problem. Falsehood (4) is that the second Roadster had become immobile as a result of overheating. The judge found that the programme contained a statement that torque was reduced to prevent overheating. Mr. Spearman submitted, with some justification, that the programme was incapable of conveying that statement, but it does contain a clear statement by Mr. Clarkson that the car had overheated and that as a result he had reduced power. Finally, the judge did not identify any unfavourable, but true, statement corresponding to falsehood (5) that there was a period of time during which neither car was available for testing.
- However, in my view Mr. Spearman's criticisms of the judge are nonetheless misplaced. The difficulty for Tesla is that over a period of some 15 months between the first broadcast of the programme in December 2008 and the beginning of the one year limitation period at the end of March 2010 there had been numerous further broadcasts. Even if the programme had contained no unfavourable, but true, statements about the Roadster, the fact remains that there had been a very wide publication of (what must be assumed to be) false statements that were no longer actionable. The need to distinguish their effect from that of the actionable falsehoods raises the issue of causation in an acute form. In those circumstances I do not think that the complaint that the judge attributed a single meaning to the various unfavourable, but true, statements he identified takes the matter any farther. In my view these criticisms of the judgment below do not advance Tesla's case to any significant degree.
- Having considered those submissions, I can turn to consider the proposed amendment itself. In my view paragraphs 9(1)-(4) standing alone sufficiently set out the nature of the case Tesla seeks to make. The judge was concerned that the proposed amendment did not distinguish between damage flowing from actionable falsehoods and damage flowing from unfavourable statements that for one reason or another were not actionable, but in my view that is to require more than can properly be asked of a party in Tesla's position. Since the claim is for general damages it is unnecessary for the claimant to identify the amount of pecuniary of loss which it is said the falsehoods were calculated to cause. All that is required in order to make the nature of the case clear is identification of the nature of the loss and the mechanism by which it is likely to be sustained. In the ordinary course of things derogatory statements about any commercial product are likely to put off some potential customers with a consequent loss of revenue from sales and (depending on the nature of the business) increases in unit costs of manufacturing, storage and distribution. Although the overall effect of the statements complained of has to be judged in the context of the non-actionable statements, I can see that the court might find it likely that some potential customers would be deterred from buying a Roadster by the actionable statements, even though they had not been deterred by any of the non-actionable statements. It might also be said, however, that the prospects of satisfying the court that the loss likely to be caused by the actionable falsehoods was significant is so small that in reality no substantial tort has been committed. On that basis it can be argued that the proceedings are an abuse of process and should be struck out in the exercise of the principles recognised in Jameel v Dow Jones. That is a question to which I shall return after I have considered the proposed claim for special damage.
(b) The claim for special damages
- In paragraph 10 of the proposed amendment Tesla alleges that it has incurred a loss of US$171,000 in respect of parts which it obtained for building right-hand drive versions of the Roadster destined for the UK market but for which it had no use after sales fell off as a result of the false statements. More significantly, it alleges that it has lost the profits it would have earned on the sale of an additional 200 Roadsters which it would otherwise have made. In support of these claims Tesla relies on paragraph 9(5) of the proposed amendment, which purports to support the claim for general damages. Mr. Caldecott submitted that that paragraph does not support the conclusion that the falsehoods complained of have caused Tesla any identifiable loss.
- In paragraph 9(5)(a) Tesla alleges that sales of the Roadster within the UK have been lower than expected and, in particular, have fallen well below the level of sales in the EU and the United States. For those purposes it relies on a comparison between sales of the Roadster and sales of the Lotus 'Elise'. In the three years 2009-2011 the number of Roadsters sold in the EU expressed as a percentage of the number of Lotus Elises sold in that market is put at 57% and in the United States 96%, whereas the number sold in the UK is put at only 7%. The marked difference is said to be attributable to the 'Top Gear' film, which is said to have had a much greater influence in the UK market than elsewhere.
- Although I accept for present purposes that Tesla will be able to establish the sales data set out in paragraph 9(5), the conclusions which it seeks to draw from them are in my view highly questionable. Lotus is a well-known marque in the UK with a strong following. There is little direct comparison between a petrol-engined sports car manufactured by a company with several dealerships and selling at about £28,000 and an electric sports car with far fewer dealerships selling at about £90,000. Moreover, cultural factors are likely to have played some part in determining the level of sales in different countries of a novel vehicle such as the Roadster.
- In support of the assertion that the relatively low level of sales in the UK is due to the programme Tesla sets out in paragraph 9(5)(b) seven examples of what it says has been the adverse reaction of the public based on having watched the programme. However, although it is alleged that many of those who approached Tesla at displays referred to the programme (as might be expected), none of the examples bears out the assertion that any potential customer was deterred by it from ordering a car. There follow in paragraph 9(5)(c) what are said to be ten examples between March 2010 and November 2011 of potential customers' expressing concern about the Roadster based on the 'Top Gear' film. However, many of the examples do not relate to potential purchasers from the UK and none of those that do adequately link an actionable falsehood to a lost sale. The two specific allegations of cancelled orders pleaded in paragraph 9(5)(d) can only relate to statements made outside the limitation period.
- In paragraph 9(5)(e) Tesla refer to a "roadshow" held in London in June 2010 as part of preparations for its flotation on the stock market. It is alleged that although overall 75% of those who had expressed initial interest in buying shares in the company actually requested an allocation, in London only 36% did so. However, it is not at all clear how a reduction in investor confidence, even if it could be shown to be due to the programme, could have contributed to the losses claimed.
- The allegation in paragraph 9(5)(f) that adverse comments (unparticularised) were posted in response to the film on Youtube on unidentified dates does not seem to me to go very far in support of Tesla's claim. Nor does the allegation in paragraph 9(5)(g) that two potential customers asked Tesla for its response to the film.
- In paragraph 9(5)(h) Tesla alleges that reservations for the new Model S Sedan have been far lower than expected in the UK, but this paragraph amounts at most to an allegation that the 'Top Gear' programme undermined confidence in Tesla's products generally. It does nothing to support the case that Tesla lost the sale of 200 additional Roadsters. Furthermore, it is difficult to see how false statements about the Roadster can have had an adverse effect on sales of the Model S Sedan, which is a wholly new vehicle which is now only just coming on to the market. Proceedings of the present kind are not a proper means of improving the image of electric vehicles in general.
- In my view the case pleaded in support of the claim for special damages is, to say the least, very thin on its own terms, but in addition to that it suffers from a more fundamental problem to which I have already referred in the context of the claim for general damages, namely, the difficulty of showing the extent to which any loss that can be established was caused by actionable statements rather than statements that for one reason or another are not actionable. This is a particularly acute question given the number of times the film was broadcast before the beginning of the limitation period. The proposed amendment proceeds on the footing that the failure to sell an additional 200 vehicles was entirely due to the statements complained of, but that is quite unrealistic. If there has been an effect on sales, some of that effect must be due to statements that are no longer actionable, but, as the judge pointed out in his paragraph , the pleading does not attempt to identify what part of the loss was caused by the actionable statements. I agree with the judge, therefore, that the proposed amendment is not adequately particularised.
- Moreover, on the basis of the material currently before the court I do not think that there is any real prospect of Tesla's being able to demonstrate at trial that it has suffered any quantifiable loss by reason of any of the actionable statements. Again, the difficulty is one of establishing that any particular loss was caused by one or more of the actionable falsehoods rather than by one or more of the statements that are not actionable. Moreover, Tesla's case in that respect is undermined both by the various public statements it made in the period following the first broadcast (in which it insisted that it had not suffered any harm as a result) and by its failure to include a claim for special damages in the original particulars of claim. It is difficult to believe that, if Tesla had suffered a loss of almost US$4 million, it would not have realised that it had suffered a substantial loss, would have investigated the position and would have been able to plead its case at the outset. The suggestion that Tesla was not in a position to formulate the claim until this stage of the proceedings is scarcely plausible. For all these reasons I am not persuaded that the case which it now seeks to advance by way of amendment has a real prospect of success and in those circumstances it is not one which in my view it should be permitted to pursue to trial. That was the view expressed by the judge in paragraph  of his judgment and I think he was right. For all those reasons I do not think that it would be right to give permission for the amendment necessary to pursue a claim for special damages.
(c) The claim for general damages – prospects of success
- I can now return to deal finally with the claim under section 3 of the Defamation Act. If, as I think, the claim is adequately pleaded in paragraphs 9(1) - (4) of the proposed amendment, it may be said that permission to make the amendment should be given so that the court at trial can decide whether the claim is made out and, if so, what is the appropriate award of damages. However, this is a case in which there are grave difficulties in identifying any pecuniary loss that the actionable false statements were calculated to cause. In my view the allegations in paragraph 9(5), far from lending support to Tesla's case, tend to emphasise that it is likely to be very difficult to persuade the court that the actionable statements, coming as they did so long after the first showing of the film, were calculated to cause any significant loss. It is at this point that the principles enunciated in Jameel v Dow Jones are potentially relevant.
- Jameel was, perhaps, an extreme example of proceedings which, although technically well-founded, were unlikely to serve any useful purpose. The claimant brought proceedings for defamation in respect of the publication by the defendant on the internet of allegedly defamatory statements. There was evidence, however, that those statements had been viewed by only five people in this jurisdiction and that as a result the damage to the claimant's reputation here was minimal. This court took the view that the publications did not amount to a real and substantial tort and that the circumstances were not such as to justify the grant of an injunction to prevent further publication. It would therefore be an abuse of the process to commit substantial resources to an action where so little was at stake. The need to hold a balance between the public right to freedom of speech and the private right to protection of reputation and between the individual's right to pursue bona fide claims and the public right to require that limited resources be allocated fairly among litigants as a whole has been recognised in the recent case of Lait v Evening Standard Ltd  1 WLR 2973, to which our attention was also drawn.
- The judge seems to have taken the view that there was in this case no real and substantial tort in respect of which Tesla could sue and that the proceedings therefore amounted to an abuse of process (paragraph ). He did so because he considered that Tesla had no real prospect of showing that the actionable falsehoods were calculated to cause it any damage over and above that caused by the non-actionable statements. For my own part I would hesitate to describe the present proceedings as an abuse of process in the ordinary sense, but for the reasons I have given I do not think that Tesla has sufficient prospect of recovering a substantial sum by way of damages to justify continuing the proceedings to trial. Nor do I think that this is a case in which the court would be at all likely to grant an injunction to prevent further publication of the film. Production of the Roadster was due to cease in 2012 in any event and it must be very doubtful whether by the time the case came to trial any purpose would be served by restraining the BBC from continuing to show it. In my view this provides an important ground of distinction between the present case and that of Grobbelaar v News Group Newspapers Ltd  UKHL 40,  1 WLR 3024, to which Mr. Spearman drew our attention. It follows that I am not persuaded that the case which Tesla seeks to make by the proposed amendment has any real prospect of success, or, if successful, is likely to yield any benefit to Tesla that can justify the devotion of the substantial resources in terms of costs and the use of court time that its determination would require. I am therefore satisfied that the judge was right to refuse permission for the amendment.
- When considering whether to grant permission to amend two closely related factors are the nature of the amendment and the stage of the proceedings at which the application is made. Mr. Caldecott submitted that the present application was made at a late stage and without any adequate explanation for the delay. For my own part I do not think that the application to amend in this case was made late in the ordinary sense. Although particulars of claim and a defence have been served, there has been no case management conference and directions have not been given for preparation for trial. There has been no disclosure and no exchange of witness statements. In truth the proceedings are still in their infancy and I can see no grounds for thinking that the proposed amendment would be likely to have a disruptive effect on the progress of the proceedings. Accordingly, if I were satisfied that the claim had a real prospect of success, I would not refuse permission to amend on that ground. As it is, however, for the reasons I have given I do not think that the prospects of success are sufficiently great to justify granting permission to make the proposed amendment.
- For all these reasons I would dismiss the appeal.
Lord Justice Rimer :
- I agree.
Lord Justice Maurice Kay :
- I also agree.
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